From fintech to edutech: India's unicorn boom decoded in charts
- IBEF
- January 7, 2022
In India in 2021, 42 start-ups became unicorns (valuations of $1 billion), compared to only 8-10 unicorns in 2018/2019/2020.
To put it in context, this is more than the sum of the previous three years. In fact, India has surpassed the United Kingdom (UK) as the third largest ecosystem with the most unicorns, with 42. According to the Hurun Global Unicorn Index for 2021, the United States of America currently has the most unicorns, followed by China. Bengaluru has risen to become the world's seventh-largest unicorn hub.
As demand from homebound consumers increased, companies in Fintech, Ecommerce, Edtech, and SaaS sectors snatched up large investments.
Mensa Companies, which purchases D2C brands and helps them scale, became a unicorn in just six months.
According to data analysed by Antique Stock Broking, eight Fintech companies (across payments, insurance, brokerage, and credit cards) joined the unicorn list in 2021, as well as diversified E-shopping companies like Online Pharmacy (PharmEasy), Social Commerce (Meesho), D2C brands (Licious, MyGlamm), Groceries (Grofers), and B2B marketplaces (Infra.Market, Moglix, OfBusiness).
According to data from Dolat Capital, Indian fintech firms raised $10.6 billion in 2021, up from $4.3 billion in 2019 and $3.1 billion in 2020.
First women-led unicorn: Acko Insurace, founded by Ruchi Deepak, is the first female-led finance startup to join the unicorn club.
Three EdTech Majors (Eruditus, upGrad, and Vedantu) became unicorns as a result of the Covid-led Edutech boom.
Despite the uncertainty surrounding cryptocurrency legislation in India, two crypto exchanges (CoinSwitch and CoinDCX) have become unicorns.
Three firms in the used automobile space have become unicorns as the demand for used cars has grown (Spinny, Cardekho, Droom).
Mensa Brands, founded by the former CEO of Myntra, is one of the world's youngest unicorns after reaching the milestone in just six months.
Total start-up funding increased thrice to $39 billion, with 42 firms becoming unicorns — more than the previous decade's total.
Why this increase in funding?
"Factors such as increased internet usage and penetration (especially post Covid), emergence of new segments and players, favourable demographics in India, increased first-time users, and others have all contributed to a splurge of private capital and the unicorn frenzy in India," according to Prateek Kumar, analyst at Antique Broking.
COVID-19 enhanced India's digital transformation as more people began to rely on digital services to meet their everyday business and personal needs, whether it was online shopping, digital payments, online health consultations, or video conferencing.
"The number of first-time users has increased significantly, and internet platforms are expanding their use-cases to attract more clients online. Investors' interest in India's internet business has grown as a result of favourable demographics and a large development opportunity across categories. This is reflected in a splurge of private cash into the unlisted area, as well as a loss in the ability of Internet start-ups to raise public capital through an IPO," Kumar stated.
Valuations keep soaring because of back-to-back funding
SoftBank, Tiger Global, Temasek, Prosus, and Falcon Edge, among others, are pouring money into Indian businesses like never before. Innovacer, Infra.Market, Meesho, CRED, PharmEasy, Groww, ShareChat, and OfBusiness, for example, have already increased their valuations in numerous rounds of funding in 2021.
The acquisition of Thyrocare by PharmEasy will go down in history as the first unicorn/startup to buyout a publicly traded company.
During its acquisition binge of Indian/global enterprises, Indian edtech behemoth Byju's went on to become the most valuable company at $21 billion.
IPOs such as Zomato, Nykaa, and Paytm attracted significant FII anchor investment during a global liquidity boom.
In fact, Indian entrepreneurs raised more money in the third quarter of 2021 than they had in the previous seven years combined. The top three biggest funding rounds were Flipkart ($3.8 bn), BYJU’s ($2.8 bn) and Swiggy ($1.25 bn).
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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